Asia’s middle distillates markets rebounded on Thursday from the previous session’s weakness against a backdrop of softer crude futures and strong prompt mid-January demand for physical spot cargoes.
On spot tenders, activity picked up after South Korea’s GS Caltex offered more end-January 10ppm sulphur gasoil shipments and some China refiners prepared to enter January spot discussions.
Cash premiums for January cargoes firmed to almost a two-month high of 59 cents per barrel, reflecting the wider January-February swap price backwardation and stronger prompt cargo buying interest in the open trading market.
A lack of lower-priced sellers also supported gains in the spot cash market.
Refining margins for the fuel were at around $21 a barrel.
Jet fuel refining margins also rebounded in tandem with gains in gasoil margins, but the emergence of more cargoes for January-loading from China majors weighed on overall trading sentiment for the aviation fuel.
The market should still be discussed at a premium for these spot cargoes, but may not be as strong as two weeks earlier, one refinery source said.
Regrade widened to almost to a one-month high of slightly more than minus 50 cents a barrel as a reflection of the weaker jet fuel swaps compared with gasoil.
SINGAPORE CASH DEALS
– No deals for both fuels.
INVENTORIES
– U.S. crude oil and distillate inventories rose last week, while gasoline stockpiles fell, according to market sources, citing American Petroleum Institute figures.
– Gasoil/diesel and jet fuel/kerosene volumes stored at trading hub Singapore were at 8.091 million barrels in the week ended Dec. 27, up from 8.081 million barrels a week ago, official data from Enterprise Singapore showed.
REFINERY NEWS
– Health authorities in California’s Contra Costa County said on Tuesday they had launched an unannounced inspection at PBF Energy’s PBF.N 156,400 barrel per day refinery in Martinez.
NEWS
– Oil output in Russia, the third largest producer in the world after the United States and Saudi Arabia, is expected to be steady or even to increase next year as Moscow has largely overcome Western sanctions, analysts said.
– Diesel supply in Asia is set to increase in 2024, raised by new refineries in the Middle East and robust exports from China, and is likely to outpace the region’s world-leading demand growth, analysts and trade sources said.
– Oil prices steadied on Thursday after falling sharply in the previous session, as concerns eased about shipping disruption along the Red Sea route even as tensions in the Middle East continued to rise.
Source: Reuters (Reporting by Trixie Yap; editing by Barbara Lewis)